In a groundbreaking move, the Intellectual Property Court of China’s Supreme People’s Court has issued its first-ever judgment with conditional enforcement terms in a patent dispute[1]. Published on 8 April 2025, the decision tackles a unique issue in patent litigation where property preservation measures can halt invalidation proceedings and preserve the status quo validity of a utility model patent, creating an unjustified advantage to the patent holder in infringement proceedings.
The case involved a Shenzhen-based technology company, the patentee of a utility model patent entitled “Anti-gravity Water Droplet Humidifier”. The patentee sued an electronics company and its representative, claiming that their humidifiers infringed claims 2, 3, and 5-8 of the patent. The lower court backed the patent owner, ordering the defendants to cease selling, destroy their stock and pay CNY150,000 in damages. The electronics company appealed, arguing that their product used prior art technology and that the case should be stayed pending the completion of patent invalidation proceedings.
The Supreme People’s Court’s second-instance review uncovered a complex situation. The patent faced multiple invalidation requests, not only from the electronics company but from other parties, however those invalidity proceedings were halted due to a property preservation order stemming from a separate private loan dispute involving the patentee and one of its creditors. In that separate case, the patentee and the creditor reached a settlement whereby the loan would be repaid by instalments with the final instalment scheduled in 2026, and as a result delaying the lifting of the preservation order until the final payment and so continuing to stay the invalidation proceedings.
The Court upheld that the defendants’ products infringed claim 8 of the patent, but then the Court took another approach to the judgment’s enforcement. Since the patent’s validity was under serious challenge and the preservation order stayed the invalidation proceedings, the Court said that the infringement decision could not be enforced until the PRC Patent Office determines the validity of claim 8. If claim 8 is found to be valid, then the injunction and damages under the judgment can then be enforced, plus interest accruing from delivery of the infringement decision to payment of the damages. However, if claim 8 is invalidated, then the judgment will not be enforceable.
This decision attempts to prevent patent owners from using property preservation orders to stay invalidation proceedings, while in the meantime continuing to assert their patent rights. Notwithstanding the SPC decision, to close this loophole completely, a more comprehensive reform, of the bifurcated patent litigation system in the PRC and the rules relating to property preservation in respect of intellectual property rights, may be necessary.
[1] (2024) ZuiGaoFaZhiMinZhong No.370